Sunday, January 15, 2012

Last week I wrote about some tax rises that are in the pipeline for Spanish property owners (Spanish property owners face a double tax shock) and our main website now carries an article describing the 2012 tax rises for Spanish residents. The plan is to raise some €6 billion in new taxes to reduce the deficit which has risen to 8% of GDP versus a target this year of 6%. However the new government is also taking an axe to public spending pencilling in nearly €9 billion of savings.Here is the breakdown of the savings being sought:Development €1.6 billonIndustry €1 billionEconomy €1.1 billionForeign Affairs €1 billionEducation €485 millionEmployment €435 millionFinance €432 millionHealth €409 millionAgriculture €400 millionDefence €340 millionInterior Ministry €163 millionJustice €40 millionLocal authorities are having their funding cut by more than €1 billion and there are €600 million in cuts planned from the Research and Development budget.From the perspective of day to day living in Spain I would guess that the Health and Education (if you have got kids) cuts are the most worrying as these are normally areas which need increases and cuts may have a very noticeable impact. Public sector workers are going to get a pay freeze, a hiring ban and a longer working week (up from 35 to 37.5 hours) so expect lots of strikes.